With solar electricity generating more than one terawatt-hour (one billion kilowatt hours) of electricity in the United States in 2010 and continuing to expand rapidly, the key question is, "How can companies best capture value as the industry grows?", according to Michael Rogol, global PV analyst and CEO of Boston-based PHOTON Consulting.
"The U.S. solar power sector is very profitable, but value is migrating from companies that manufacture toward companies that provide installation, financing and other services. As profit migrates, solar companies and utilities have at least seven models to capture value," said Rogol, during his presentation at the 3rd Solar Electric Utility Conference portion of the 2010 Solar Terawatt-hours Conference Series hosted by PHOTON USA Corp. in San Francisco on Thursday.
Rogol showed how lower module prices are enabling swift growth in the North American solar market and how, as this occurs, profit within the sector is shifting downstream. The key to success, according to Rogol, is a strong, profitable business model capable of "unlocking value."
He provided several key examples of strategies for strong value creation, including being low-cost suppliers, agile traders, value-added service providers, system developers and bundlers of solar power with other technologies. For traditional electricity companies, the biggest challenge, he noted, is to adjust their traditional businesses to create value from solar electricity.
"This is not the dot-com boom with easy access to capital. Companies need to build profitable businesses largely on their own. To do this requires detailed understanding of changing solar power market dynamics and how the electricity sector is evolving across North America," said Rogol.
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